I believe there are plenty of attractive value stocks on offer across the FTSE at present.
Two picks investors should consider buying are Centrica (LSE: CNA), and Safestore (LSE: SAFE).
Here’s why!
Centrica
The owner of British Gas is a mammoth business that supplies over 10m residential and businesses with energy.
Centrica shares look like they’re beginning to gain momentum once more after a sharp drop in September last year. Over a 12-month period, they’re up 14% from 120p at this time last year, to current levels of 137p.
From a bearish view, two issues concern me. Firstly, weaker wholesale gas prices could hurt performance, and potentially returns moving forward. I’ll keep an eye on this.
Next, the transition to renewable energy is an expensive endeavour. This shift could hurt shareholder returns as it takes a bite out of what currently looks like a healthy balance sheet. However, the business has already earmarked money for this upcoming change and looks to be preparing. Preparation is always a good sign for me.
From a bullish view, the shares look dirt-cheap to me right now on a price-to-earnings ratio of just 2! The average P/E ratio across the FTSE 250 index is closer to 12.
Next, the business offers a dividend yield of close to 3%. Furthermore, an ongoing £1bn share buyback scheme sweetens the investment case. However, I do understand that dividends are never guaranteed.
Centrica has the financial strength, brand power, and reach to be a potentially good buy, if you ask me. I’d personally be willing to buy some shares when I next can.
Safestore
As the largest self-storage provider in the UK, Safestore’s dominant market position and excellent track record are some of the main draws for me personally.
The shares have dropped 14% over a 12-month period from 979p at this time last year, to current levels of 889p.
I reckon a big part of this drop is the current economic pressures. As interest rates are higher, and inflation has been high, rental collection and property values have dropped. This is the biggest ongoing risk for the firm, especially as it is also putting money into an aggressive European expansion plan.
Another risk I’m wary of is a debt-heavy balance sheet. This debt could be harder to pay off during the current high interest environment, and hurt future growth and returns.
Speaking of expansion, Safestore is now the second-largest firm of its type on the continent. This is an exciting development. It’s where I feel Safestore could soar to new heights in the future. The reason for this is because the European storage market is much less developed, offering good growth opportunities.
Next, the shares look great value for money to me on a price-to-earnings ratio of just nine. Plus, a dividend yield of 3.4% is attractive to help build a passive income stream.
Like Centrica, Safestore is another stock I’d personally love to buy when I next can.
The post 2 cracking value stocks investors should consider snapping up! appeared first on The Motley Fool UK.
Pound coins for sale — 31 pence?
This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
More reading
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How much second income would I get if I put £10k into dirt cheap Centrica shares?
Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Safestore Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
